The recent diplomatic overtures between Juba and Khartoum are an indication that the two countries are now ready to co-operate economically by implementing the agreement that was signed in September 2012. That agreement was signed in Addis Ababa and was brokered by the African Union; a deal which thwarted sanctions had the Sudans not co-operated.

Juba will resume production and exports of oil through Sudan, while Khartoum will earn revenues from use of its existing oil export infrastructure. The visit by Omar al-Bashir to Juba suggests there is now a seriousness and level of commitment in working together for the mutual benefits, despite a range of outstanding political differences.

Prior to the oil production shutdown in January 2012, the Khartoum government had decreed an oil export transit fee of around $32 per barrel to be paid by South Sudan for using its export and logistics facilities. The figure that has finally been negotiated is between $9 and $11 per barrel depending on the grade of crude oil provided and its source. Juba will also pay lump sum compensation to Khartoum for lost revenues.

But what was interesting to note was that the absence of 350,000 barrels per day (bpd) of South Sudanese oil from global markets had very little if at all noticeable impacts on the global oil supply and demand on either balance or prices. Oversupply of oil by other countries, and reduced demand in others, were able to smoothly accommodate production shortfalls from South Sudan.

The oil exports closure which lasted for more than a year gave the two countries time to re-evaluate their economies in the absence of oil revenues. The North was able to look at other sources of revenue by developing other resources, particularly mining for gold. The South, faced with a serious budget deficit, was able to re-examine how efficiently they spend money and plugged a number of cashflow leakages as a result. The South may also have paid close attention in developing its non-oil economic sectors.

The resumption of oil exports by South Sudan will have implications on the region and on Kenya in particular. The struggling Kenyan businesses, for example, already in South Sudan will be expecting a revival with increased foreign exchange inflows into the economy.

If sustainable, the Khartoum-Juba agreement will attract even more regional and international investments. There is the pending membership of EAC (East African Community) which will formally open up South Sudan to more regional trade and protocol.

For its part the Juba leadership will need to comprehensively establish security within its borders to attract and maintain investments and donor development funds.

It’s been a bit of a tricky situation. South Sudan seceded from Sudan in July 2011 after a peace deal in 2005 which ended in the longest running civil war (guerrilla warfare for 22 years) in Africa. Along with this South Sudanese independence came 75% of Sudan’s oil resources—minus the infrastructure (pipelines and ports) which remains in Sudan. So South Sudan is now rich in oil, but it’s land-locked.

The climax came in December 2011, just a few months after South Sudan seceded, when Sudan started diverting South Sudanese oil to its own refineries and selling it illegally on international markets. South Sudan lashed back by shutting off the pumps in January 2012. Neither could maintain this absence of oil revenues for much longer. (About 98% of South Sudan’s state revenue comes from the production of about 350,000 barrels of oil per day).

Upon Sudan’s insistence on guarantees that South Sudan would cease backing rebels fighting in the South Kordofan and Blue Nile states—oil-producing regions that haven’t been fully demarcated. Sudan softened its stance to allow for the creation of a buffer zone instead. This time they have got the full package. The deal calls for a withdrawal of troops from both Sudan and South Sudan and the creation of a demilitarized zone to facilitate the flow of oil. Oil hasn’t flowed for about a year after South Sudan blocked exports via Sudan over a tariff dispute.

In less than two year after the joyous street parties that marked South Sudan birth, the celebrations seem to be over with accusations of widespread human rights abuses in the world's newest nation.

Alongside the oil issue, several border disputes with Sudan continue to strain ties. The main row is over border region of Abyei, where a referendum for the residents to decide whether to join south or north has been delayed over voter eligibility.

The conflict is rooted in a dispute over land between farmers of the pro-South Sudan Dinka Ngok people and cattle-herding Misseriya Arab tribesmen.

Another border conflict zone is the Nuba Mountains region of Sudan's South Kordofan state, where violence continues between the largely Christian and pro-SPLA Nuba people and northern government forces.

Inside South Sudan, a cattle-raiding feud between rival ethnic groups in Jonglei state has left hundreds of people dead and some 100,000 displaced since independence.

And several rebel forces opposed to the government have emerged, including the South Sudan Liberation Army (SSLA). Rumors are that these forces are funded by Sudan, which denies the accusation.
South Sudan's ruling party is broadly made up of former guerrilla fighters from the 1983-2005 civil war, with little experience of civilian rule.

With little or no infrastructure in place and South Sudan being land locked they will have a very difficult time all along to make sustainable good business deal with their natural resources.

With legacy of infighting over decades, a torn out and traumatized population, with little or no trust for anyone in a highly diverse population ethnically and linguistically - it is a long battered way ahead.

A student-led campaign supported by Aegis Trust (UK NGO) is to culminate in a mass tweet 'at' William Hague on 20 May 2013, prompting him to condemn the bombings publically. Support the tweet now by signing up to the thunderclap (https://www.thunderclap.it/projects/1565-we-need-to-talk-about-sudan) - an automated, crowd-speaking platform which is to co-ordinate the tweets of all those signed cup (currently 265).

South Sudan is a classic "project" of right-thinking Westerners, a cause celebre in the literal sense as many of its leading backers were actual celebrities.

I have to admit I was blinkered. I felt the southerners had had a raw deal in the post-colonial period; I still feel that way, but it is clear that South Sudan is not in any real sense a country. Giving it independence without a clear delineation of every mile of its border with the north, and reinforcing it with UN troops, was the biggest mistake. The border issues alone will doom the country to perpetual skirmishes and shutdowns of its oil industry.

The country was rushed into independence by diplomatic and human rights luminaries who saw it is a triumph of their careers. On the ground, it is an unserviced, mostly roadless territory that will only be held together by constant UN and NGO intervention.

A student-led campaign supported by Aegis Trust (UK NGO) is to culminate in a mass tweet 'at' William Hague on 20 May 2013, prompting him to condemn the bombings publically. Support the tweet now by signing up to the thunderclap (https://www.thunderclap.it/projects/1565-we-need-to-talk-about-sudan) - an automated, crowd-speaking platform which is to co-ordinate the tweets of all those signed cup (currently 265).

South Sudan is a failed state without Sudan. Sudan technically controls its bloodline, South Sudan can neither afford a new pipeline to Kenya or export by trucks.

In addition to that, south sudan oil is likely to halve by 2020, making everything even more difficult therefor it must use its oil well wisely to benefit from it. On the other hand, Sudan needs those oil fees , even though they are not as much dependent on South Sudan's oil , it can keep its economy going well for the short run because its in need of more foreign exchange reserves.